Effective January 1, 2016, all District of Columbia employers (not including the United States or DC governments) with 20 or more employees were required to provide at least one of three transportation benefit programs.
The first program gives employees a pre-tax fringe benefit— meaning the employee can deduct pre-tax money (the maximum determined by the IRS) to be used for commuter highway vehicle, transit, or bicycling. The second is an employer paid program in which the employer supplies to employees a transit pass for the public transit system or reimbursement of vanpool or bicycling costs in an amount at least equal to the price of the transit pass for an equivalent trip on public transit. The third program allows employers to provide transportation in a vanpool or bus operated by or for the employer at no cost to the covered employee.
Individuals are deemed to be employees in the District of Columbia if they 1) regularly spend more than 50% of their working time in the District of Columbia or 2) their employment is based in the District of Columbia and they regularly spend a substantial amount of their working time in the District and not more than 50% of their working time is any particular state.
An employer that does not offer at least one of the programs may be subject to civil fines and penalties as enforced by the District of Columbia Department of Employment Services. However, the Department of Employment Services has stated that it will not begin enforcing this law until April 1, 2016.
Recommended Steps for Employers
Employers in the District of Columbia should consult with their employment counsel and take steps to comply with this new legal requirement:
Determine if there is a transportation benefit program already in place and whether it should to be revised to ensure compliance with the new law.
Determine which benefit program(s) they want and can afford to offer.
Draft and implement one or more of the three benefit programs prescribed by the transportation benefit law.
Inform employees about the new transportation program.
For more information, please contact Melissa Calhoon Jones, chair of the Labor and Employment Group, who counsels companies on employment, labor, and immigration issues. Ms. Jones may be reached via email or 410.752.9765.
This information has been prepared by Tydings for informational purposes only and does not constitute legal advice.